Every year, more and more self-employed people decide to choose entrepreneurship. However, working on your own can sometimes be intimidating, and it can be beneficial to hold a salaried job to ensure a minimum income each month. We’ve included all the useful information to know if you want to combine a permanent contract with a standalone business.
CDI and Independent Work: What Does the Law Say About It?
According to the Labor Code, the accumulation of an employee’s job and independent activity is not prohibited. So it is quite possible to do independent assignments outside the working hours imposed by the employment contract. Please note that there are still many cases when this combination is impossible:
- If your employment contract contains an exclusive clause (banning the exercise of other professional activity),
- If you are competing with your employer,
- If you practice a regulated profession that cannot be combined with the status of a self-entrepreneur: a health profession, a legal and judicial profession, a chartered accountant, an auditor, an agricultural profession or an insurance profession,
- If you are a government employee (the two cases can only be combined for certain activities, and for a maximum of 3 years).
It should also be noted that all employees are subject to a duty of loyalty to the employer. This duty means not working on behalf of his self-employed company during his working hours as an employee. You may not use materials provided as part of your salaried activity for your own business either. The last conditions are: do not talk negatively about your company, and do not steal from your company’s employees and customers for your own account. In the event of non-compliance with this duty, you expose yourself to a ban on the exercise of your activity, as well as to the payment of compensation.
It is also important to note that as a freelancer you cannot do independent tasks for your employer. In fact, the labor law does not allow companies to use their employees as service providers.
What independent legal status should I choose?
When you start your own business in parallel with your job, you have to determine the legal status. There are many of them, and they involve different tax systems and obligations.
In general, freelancers who choose to hold a CDI have a limited number of hours per week to devote to their personal activity. It is therefore wise to choose the Small Enterprise System (formerly Self-Enterprise), which offers a simplified tax and accounting system. Ideal for small businesses, it is subject to an annual turnover cap. Another notable counterpart is the impossibility of deducting taxable income from your professional expenses.
In the event that this system is not enough / is no longer enough for you, it is always possible to later move to a higher legal position, with higher turnover ceilings: EURL, SASU, etc.
Compare the different legal statuses of the self-employed
Double the contribution but double the pension
If you combine a self-employment and a salaried activity, you will have to pay a double contribution, because you will be affiliated with the Social Security Planners (CPAM for salaried activity and SSI for independent activity). It is indicated that your health costs will be borne by the organization that managed the file before your activity accrual, but you have the possibility to request a change if you wish (option right).
However, the retirement coverage is also different in the case of multiple activities. Thus, the pension plan will be considered private, and its amount will be calculated taking into account this dual activity. The compensation will be paid by the two funds on their own terms, but you can standardize the procedures thanks to the LURA system, which was created in 2017.
Note that it is also possible to combine unemployment with independent activity, although the turnover generated by a small enterprise is taken into account when calculating benefits (the higher your earnings, the lower the amount of allowances). ).
How do you declare your income?
Attention, the accumulation of self-entrepreneur status and the employee affects the way you take on taxes. In fact, the tax base of income tax takes into account these two distinct sources of income. It is therefore necessary to issue two separate declarations.
Declare your independent income
Since this is income from a self-employed activity, it should be mentioned in Proclamation No. 2042-C-PRO. They will be taxed in two different categories (BIC or BNC) depending on your type of activity.
Declare your income as an employee
The employee’s income must be mentioned on your declaration No. 2042, indicating the category salaries and wages. All of these procedures are performed online (except for some cases that may require paper format). Due dates depend on where you live, and more precisely on your department number.